Policy Governance is popular in board rooms across America and Canada. Photograph: Anthony Harvie/Getty Images

Picture the scene. You're just starting a board meeting at your co-operative and there is a really big item on the agenda – the strategic direction of the entire million-pound enterprise no less – and yet there's a nagging fear a proposal to spend £5,000 on a new publication will be given more attention from directors.

It's a common experience in many organisations, where directors prefer micro–managing to strategy.

There's other problems too, there's a board member who really knows their onions and as a result, other directors feel they know less about the matters in hand, and don't say a word. Later on, the more knowledgeable director will accuse the quieter ones of not pulling their weight.

As an advisor to co-operatives, I have seen more of this than is spoke about openly. I spent many years looking for solutions to these conundrums and the answers always felt unsatisfactory - more training, more development, more skills audits. All of which are fine for a multi-billion-pound business like the Co-operative, but are less workable in community co-operatives where volunteers are already hard-pressed and where encouragement to take their role even more seriously will do little to boost numbers standing for election.

Boards are messy, because people are messy. In many third-sector organisations, the board might try to reduce messiness by handpicking its new members based on who'll be a good fit. This is not the case in co-ops, where every year offers opportunities for new people, who must have no prior understanding of how things have worked before, to be elected by members. In some cases, it can be good to have no grounding, as this can open up the board to new perspectives but it can just as easily end up as groundhog day, with each new board member reserving the right to ensure the organisation has a bout of navel–gazing governance conflict like the last one.

However there may be a better solution to some of these issues that works not by defining what a good board member should do or be but instead focuses on what a good board is like.

Andy Goldring is the chief executive of the Permaculture Association, a charity with co-operative principles. They are member-owned with an open and voluntary membership and are member-led with a one-member, one-vote policy. Goldring is an astute observer of people and systems and some years back as he watched the first meeting of the newly-elected board of the association, he knew something was up. He said: "They just weren't clicking. They were all competent people, but our board wasn't a competent body."

In permaculture, a branch of ecological design, there's no solution that can't be improved by better design based on new or better information. This in mind, the association went on to adopt a policy governance, which aims to 'design out' as many problems as possible by making a strict division between the responsibilities of boards and responsibilities of staff allowing both to do two vitally important but different things.

Although this may not appear radical, after all boards are supposed to be responsible for strategy and staff operations, there is a problem with this standard approach. Within a organisation there are clear strategic decisions which belong to the board and operational ones. The problem is that there is a large grey area between strategy and operation where staff and board members can legitimately make a case for the matter being part of their domain.

Both are often right, which is why the conflict can be so hard to resolve. The staff who have been hired for their expertise can't easily defer to people on issues they see as fundamental to their professional competence, while the board are right to say that the big issues need to be decided by those representing members, not people whose views are affected by being dependent on the continued salary they hope to carry on drawing.

Policy governance, which is sometimes called Carver governance after its founders John and Miriam Carver, is an approach that's much more widely understood and used in the US and Canada. It's been used for school boards, hospitals, students' unions, credit unions, co-operatives and charities.

The job of the board is to ask a simple set of very important questions: what is the organisation there to achieve, what can it not do in order to achieve these goals and are these goals being achieved in the most effective way they can be? The answers, called 'policies', govern the organisation and give the technique its name.

The board sets out rationalisation of the organisation – the 'ends'. These shouldn't be aspirational targets but instead be practical and achievable goals that flow directly from what the organisation is there to do. Targets that are too vague mean that it's easy to look like you tried to achieve them and hard to prove you've not been in some way successful. Without such goals, the Carvers say, board scrutiny is merely an invitation for staff to prove they have been busy, not that they have been effective.

Under policy governance, staff can use any legal means at their disposal to achieve the goals, except for methods proscribed in the 'means' policies. Instead of telling staff what they should be doing, policy governance tells them what they can't do, and they're empowered to achieve critical and core goals, rather than given vague targets subject to capricious micromanagement.

As Andy Golding says: "when the rules are clear, you can spend more time playing the game."

For him and the Permaculture Association, that means they "now spend time talking to members about the important stuff", echoing a benefit identified by the Carvers who say that boards have "put most of their influence on operational means and nurtured their closest relationship with staff."

Organisations looking to explore the mechanism should be prepared to commit time into putting it in place. Goldring says Permaculture Association trustees spent 18 months drafting the policies that now structure the organisation.

It should be time well spent though. Democratic member control too often feels like a case of democratic representatives claiming a mandate from people with whom they have little engagement. Members, directors and staff could all benefit from something a little more systematic.